The Explosion of Broadcast Diginet Channels

It all started with the Digital Transition and Public Safety
Act of 2005. Four years after the U.S. Congress enacted this legislation, analog
television broadcasts ended and digital television became the official
standard.

Now, almost 10 years after President George W. Bush signed
the bill, a new channel format has been effervescing.

Diginets, also known as digital subchannels, “dot-twos” and multicasts, are a business model that many broadcasters are pursuing.

How does it work? Essentially, as a result of the federal mandate, a higher
amount of data can be transmitted in a TV signal.

"What happened when we went from analog to
digital," said
Nik Miles, creative services manager for KRCW, "is TV stations could pack
a lot more into their signal. We get a piece of bandwidth and we're able to
divide our signal to give our viewers more than a single TV station."

Stations will lease out the signal to subchannels,
which only seems to be beneficial.

“The stations aren't paying anything for the programming, and all they're doing
is sharing the sales revenue," Mark Fratrik, SVP, and chief economist at
the research firm BIA/Kelsey told Adweek.

“The appeal of subchannel leases is that it is a simple real
estate transaction,” adds
Michael Kokernak, CEO of Across Platforms. “As long as the tenant keeps paying
the bills, it is a turnkey operation for the station owner.”

Generally, the programming on
diginets tends to be nostalgic: re-runs of vintage shows like “I Dream of
Jeannie,” “The Munsters” and “The Beverly Hillbillies” air on channels with
names like Antenna TV, Cozi TV and Decades.

"You may laugh at 'Charlie's Angels,' 'Gilligan's Island,' 'The Odd
Couple' or 'Little House on the Prairie,' but guess what? There is a huge
audience that is willing to watch them," Ken Werner, president of Warner
Bros. Domestic Television Distribution, tells
the LA Times. "Way back when television was designed for the entire family
with one TV, everybody in the business was focused on developing shows that had
broad appeal to everyone, and that continues to have efficacies.”

“Diginets have created a viable business model for over-the-air channels that
are delivering programming which, in some cases, was either not previously
available on TV and/or not being sufficiently monetized,” Werner continued.

And therein lies the allure for
advertisers – the diginet audience is made up of a key older demographic.

“From the advertiser’s
perspective, [diginets] can be useful in targeting a very specific segment of
viewers," said Brad Adgate, SVP and director of research for the media
buying agency Horizon Media.

Currently, only two diginets are tracked by Nielsen, MeTV and Bounce TV, so for
the time being, Adgate describes subchannel advertising as “concept sells.”

Who else likes diginets? Hollywood studios, which can license out their content
for a fee – content which previously was believed to have little value.

However, one issue that diginets seem to be encountering is placement on
satellite services.

DirecTV and Dish Network have declined
carriage due to “limited spot beam capacity,” however with DirecTV’s recent
merger with AT&T U-Verse, it certainly seems possible this could change.